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REAL ESTATE OWNED, NET
 6 Months Ended
Jun. 30, 2013
Real Estate [Abstract]  
REAL ESTATE OWNED, NET
REAL ESTATE OWNED, NET

The following table presents the changes in REO, net of valuation adjustments, for the three and six months ended June 30, 2013 and 2012 (in thousands):
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
2013

 
2012

 
2013

 
2012

Balance, beginning of the period
$
11,160

 
$
27,723

 
$
15,778

 
$
42,965

Additions from loan foreclosures
418

 
6,885

 
1,504

 
8,486

Additions from capitalized costs
—

 
7

 
46

 
134

Dispositions of REO
(5,305
)
 
(7,798
)
 
(11,787
)
 
(23,239
)
Gain on sale of REO
667

 
567

 
1,472

 
667

Valuation adjustments in the period
(226
)
 
(1,568
)
 
(299
)
 
(3,197
)
Balance, end of the period
$
6,714

 
$
25,816

 
$
6,714

 
$
25,816



The following table shows REO by type and geographic location by state as of June 30, 2013 (in thousands):
 
Washington
 
Oregon
 
Idaho
 
Total
Commercial real estate
$
—

 
$
—

 
$
199

 
$
199

One- to four-family construction
—

 
—

 
—

 
—

Land development—residential
1,339

 
2,979

 
70

 
4,388

One- to four-family real estate
1,203

 
924

 
—

 
2,127

Balance, end of period
$
2,542

 
$
3,903

 
$
269

 
$
6,714



REO properties are recorded at the lower of the estimated fair value of the property, less expected selling costs, or the carrying value of the defaulted loan, establishing a new cost basis.  Subsequently, REO properties are carried at the lower of the new cost basis or updated fair market values, based on updated appraisals of the underlying properties, as received.  Valuation allowances on the carrying value of REO may be recognized based on updated appraisals or on management’s authorization to reduce the selling price of a property.